California overhauls incentive program for electric vehicles, rich people beware

The state of California is revamping its incentive program as a response to criticism that its rebates sometimes serves as a windfall for the rich. The California Legislature recently passed a bill phasing out EV rebates for wealthy buyers. The bill also offers new incentives for low-income car owners who scrap their cars and instead use public transit or join a car-sharing service.

Max Baumhefner, an attorney at the Natural Resources Defense Council, remarked that the income cap is meant to make sure that the program is “in the black while not undermining progress” toward the California’s EV goals.

Around a third of the EVs sold in the United States are sold in California, where the about 100,000 EV owners receive a few incentives like the use of carpool lanes. Aside from the legislation, large carmakers also have to deal to stiffer regulations requiring a certain percentage of the vehicles they sell to be zero-emission vehicles, or ZEVs.

California has offered for years a $2,500 rebate for buyers of EVs like the Nissan Leaf or Tesla Model S and a $1,500 rebate for customers of plug-in hybrids such as the Chevrolet Volt are eligible for a $1,500 rebate.

These credits were subject of complaints in the state due to the high demand for the Tesla Model S, which carries a starting price of $72,240, including shipping before the $7,500 federal tax credit and the $2,500 California rebate.

The popularity of the Model S has vexed state legislators, who say that the rebate only benefits those wealthy customers who would have purchased the EV even without the incentives. Likewise, carmakers selling EVs have not opposed California’s change of heart towards these units.

Diarmuid O'Connell, vice president for business development at Tesla, remarked to the Los Angeles Times that it is a “fair argument” that the rich needs less rebates than others.

The bill, which is waiting to be signed by Gov. Jerry Brown, directs the California Air Resources Board to concoct regulations by the end of June 2015 that sets the max income level for eligible households.